Some Americans say they skipped life insurance as cases fell in their area, a survey finds — but the need may still exist.
Many Americans purchased life insurance during the pandemic, perhaps because they were acutely aware of their mortality. But some lost interest when local COVID-19 cases declined, a new NerdWallet survey found.
35 percent of people who were considering purchasing life insurance because of the pandemic, but didn’t purchase it, say that they did so because COVID-19 numbers in their region started to drop.
This suggests that some people see life insurance as a “panic buy,” according to Grant Dunn, vice-president of financial services at Lakenan Insurance in Missouri. This is not the purpose of life insurance. It is not designed to cover people for six months while COVID rates are high in their region. It is meant to protect your family throughout all of your income-earning year and beyond.
You will need to fix any gaps in your coverage that the pandemic revealed, regardless of how COVID-19 cases develop. Find out how to determine if you need life insurance despite current events and make sure you get the right coverage.
Some shoppers opted against life insurance
NerdWallet conducted an online survey asking adults in the United States who thought about buying life insurance to protect themselves against the pandemic.
- 35% of respondents say that they decided not to purchase coverage because COVID-19 case numbers in their region started decreasing.
- 25% said it was too costly.
- 24% felt their workplace coverage was adequate.
It is not an easy question to answer whether you need life insurance. How much should you buy and how much should you spend. The survey found that 17% of Americans considered purchasing life insurance because of the pandemic, but chose not to do so. 14% said they were unsure where to begin. These concerns can be addressed to help you create a stronger life insurance plan.
How to decide if you require life insurance
While immediate threats such as the pandemic might highlight a need for a product, they should not dictate your purchasing decision. Unexpected death can happen at any moment, and not only because of COVID-19.
Also, just because your awareness suddenly increases about the things you would be leaving behind does not automatically make you eligible for life insurance. These are the questions to ask before you start shopping for coverage.
Will your death create a financial burden?
If your death places a financial burden upon others, you will typically need life insurance. Each person’s burden will be different. You may need a larger policy to provide support for your spouse or children over many years or a smaller policy to pay final expenses like burial costs.
You can quickly estimate how much coverage you need by adding up all your long-term financial obligations to your assets. Another rule that is popular is to multiply your income 10 times. These quick tips are only a guide. Online calculators can help you determine how much life insurance you need.
Is this temporary financial stress?
The type of life insurance that you need will depend on how long others can rely upon you financially. A term policy can be beneficial if you are supporting your child through college. It covers you for only the time you need. Term life is usually less expensive than permanent insurance and lasts for a certain number of years.
Alternatively, if you plan to support a family member for the foreseeable future, you might want to consider a permanent life insurance policy, as coverage lasts your entire life.
Are you satisfied with your workplace’s life insurance?
Once you have calculated the amount of life insurance that you require, you can check if you have enough coverage. According to the Bureau of Labor Statistics, almost 6 out 10 American civilian workers had a workplace plan for life insurance in March 2020. However, group life insurance provided by an employer is generally one to two times your annual salary, which may fall short of what you need. Life insurance through work is usually tied to your job. If you lose your job, your coverage may be canceled.
Kathleen W. Bilderback of Affinity Law Group, St. Louis, says that “life insurance is bought for a need.” While someone could die from coronavirus, another person can get into their car and cause an accident and then pass away. If the need exists, it is likely that there is one.